27.12.202414:55 Forex Analysis & Reviews: GBP/USD: Trading Plan for the U.S. Session on December 27th (Review of Morning Trades). The Pound Recovered Slightly

In my morning forecast, I highlighted the 1.2503 level as a decision point for market entry. Let's examine the 5-minute chart to understand what transpired. A decline occurred, but it fell short of testing 1.2503 by just a few pips, so I stayed out of trades. The technical outlook for the second half of the day remains unchanged.

To open long positions on GBP/USD:

The bulls performed well near 1.2503 and managed to take control of the channel midpoint at 1.2536, which they now need to defend. In the event of a decline due to strong U.S. data on the goods trade balance and wholesale inventories, only a false breakout near 1.2536 would provide a good entry point for buying, aiming for further recovery of GBP/USD toward the 1.2571 resistance. A breakout and retest of this range from above would open new opportunities to buy with a potential target of 1.2611, where buyers are likely to face challenges. The furthest target would be the 1.2638 level, where I plan to take profits, although testing this level seems unlikely given current market conditions. If GBP/USD declines and bulls show no activity around 1.2536—more likely—buyers will lose all initiative. In this case, only a false breakout near the next support at 1.2503 would create suitable conditions for opening long positions. I plan to buy GBP/USD immediately on a rebound from the 1.2478 low, targeting an intraday correction of 30-35 points.

To open short positions on GBP/USD:

Pound sellers are not rushing to act. In the event of a pair rise, bears will need to defend the 1.2571 level, as breaking above it would create significant problems for the current bearish trend. Therefore, a false breakout there would provide an opportunity to increase short positions, targeting a decline to 1.2536, which served as resistance earlier this morning. A breakout and retest of this range from below would trigger stop-loss orders and open the path toward 1.2503, dealing a significant blow to bullish positions. The furthest target would be the 1.2478 area, where I plan to take profits. If demand for the pound persists after the U.S. data and sellers show no presence near 1.2571, buyers will have a good chance for a new wave of growth at the end of the week. Bears will then have to retreat to the 1.2611 resistance. I will sell there only on a false breakout. If there is no downward movement either, I will look for short positions on a rebound from the 1.2638 level, expecting a correction of 30-35 points within the day.

The Commitment of Traders (COT) report for December 10 showed a reduction in short positions and an increase in long positions. Overall, market positioning remained unchanged as many traders adopted a wait-and-see approach ahead of the Bank of England's year-end meeting. The regulator faces a difficult decision on interest rates due to the latest GDP and inflation data, forcing traders to act cautiously. The latest COT report indicated that long non-commercial positions increased by 4,707 to 102,763, while short non-commercial positions decreased by 3,092 to 75,638. As a result, the gap between long and short positions widened by 11,321.

Indicator Signals

Moving Averages

Trading is above the 30 and 50-day moving averages, indicating further pound growth.

Note: The periods and prices of moving averages are considered by the author on the H1 hourly chart and differ from the standard definitions on the D1 daily chart.

Bollinger Bands

In case of a decline, the lower boundary of the indicator near 1.2503 will act as support.

Indicator Descriptions:

• Moving Average (MA): Identifies the current trend by smoothing out volatility and noise.
  • Period: 50 (yellow on the chart).
  • Period: 30 (green on the chart).
• MACD (Moving Average Convergence/Divergence):
  • Fast EMA: Period 12
  • Slow EMA: Period 26
  • SMA: Period 9
• Bollinger Bands: Period 20
• Non-Commercial Traders: Speculators, including individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting certain criteria.
• Long Non-Commercial Positions: Total long open positions held by non-commercial traders.
• Short Non-Commercial Positions: Total short open positions held by non-commercial traders.
• Total Non-Commercial Net Position: The difference between short and long positions of non-commercial traders.